WASHINGTON – A four-member family spy ring, operating for two decades out of California, provided China with

some of the “crown jewels of the future Navy,” and could damage U.S. ability to defend Taiwan in a conflict, it was revealed yesterday.

Naval warfare and counter-espionage experts said that the spy case involving Chinese electrical engineer Chi Mak, his brother, Tai Mak, and their wives is potentially one of the most damaging leaks of Navy secrets in decades.

The mushrooming spy case is adding fresh complications to U.S.-Chinese relations in advance of President Bush’s trip to Beijing this weekend.

Mak, 65, who was employed by Anaheim-based Power Paragon, worked on more than 200 defense contracts. Federal prosecutors believe his career as a Chinese mole goes back to 1985, when he first emigrated to the United

States.

Mak had planned to retire next March and was recently overheard on FBI wiretaps inquiring about real estate prices in Hong Kong, according to an FBI affidavit.

Following a yearlong probe, in which the FBI placed a video camera in his home, searched his garbage and intercepted his e-mails, a federal grand jury made indictments Tuesday.

Those indicted were Mak, his wife, Rebecca Laiwah Chiu, 64, and Mak’s brother, Tai, 56, a director for a Hong Kong TV station. The government charged them with failing to register as agents of the Chinese government, but stopped short of espionage.

The Justice Department said that the family provided Chinese spymasters with cutting-edge research on some of the Navy’s most sensitive new programs. They include Quiet Electronic Drive, which makes warships and submarines less vulnerable to detection on sonar or to torpedoes that hone in on sound.

Sources familiar with the case said Mak is also believed to have passed Beijing data on:

The Washington Times reported yesterday the Chinese also received details on the ultra-miniature unmanned drone known as Dragon Eye that is now being used by U.S. Marines in Iraq.

“These are the crown jewels of the future Navy. It’s potentially very damaging that the Chinese may have some of this technology,” said Dan Goure, a military analyst ith the Lexington Institute think tank.

China’s focus on naval warfare secrets in this case appears designed to neutralize the U.S. technological advantage in any future conflict over Taiwan, sources familiar with the case told The Post.

U.S. warships, submarines and anti-missile systems frequently have been deployed to protect Taiwan from threats from Communist rulers.